Barrier To Business Growth On Both Sides Of Tasman

Compliance A Serious
Barrier To Business Growth On Both Sides Of The
Tasman

Businesses on both sides of the Tasman are
struggling under the weight of unwieldy red tape and
compliance costs, according to recent findings from surveys
in Auckland and New South Wales. Most strikingly, small
businesses in both countries are the hardest hit.

In
some areas of compliance, New South Wales businesses face
even higher costs than their New Zealand counterparts.

These findings are among the results of two recent
surveys – one of Auckland Chamber of Commerce members and
the other of State Chamber of Commerce (NSW) members.

One
of the most alarming findings was that, in both countries,
small businesses are required to handle a similar amount of
paperwork as much larger businesses, which imposes huge
demands on staff and business resources.

Michael Barnett,
Chief Executive of the Auckland Chamber of Commerce, and
Margy Osmond, Chief Executive Officer of the State Chamber
of Commerce (NSW), say the heavy demands compliance work
places on small business owners takes them away from their
core work of leading and growing their businesses and, as a
result, can have a negative impact on areas such as sales
and profitability.

The Auckland survey reveals that
companies with staff of five or fewer spend 172 hours
annually – the equivalent of about a month’s work - on
Government-related red tape and compliance issues while
larger businesses spend comparatively fewer hours per staff
member.

“Clearly some compliance costs are necessary,
but when a business spends the equivalent of a full-time
month each year on compliance work, they face a huge barrier
to business growth – especially if they are a small
business,” says Mr Barnett.

A similar theme emerged in
Australia. For example, in the New South Wales survey the
owners of businesses with five or fewer staff do most of the
compliance paperwork themselves.

Ms Osmond says the burden
on small businesses is disproportionate to the size of the
business. She says that in many cases industrial relations
paperwork takes longer per employee for a small business to
deal with than a medium business, and that tax paperwork
takes almost as long for a small business as a medium
business.

The surveys found that GST places significantly
more demand on New South Wales businesses than its New
Zealand counterparts. In New Zealand, the average business
takes between 15 and 30 hours a year to complete GST returns
while Australian businesses take from 20 to 60 hours a
year.

Auckland companies also face lower compliance costs
than those in New South Wales for obtaining licences,
managing superannuation schemes and handling payroll tax.

Only 40 percent of New Zealand firms need a licence to
operate compared with 60 percent in Australia. All
Australian businesses have payroll tax liabilities, but
there is no such equivalent tax in New Zealand. As well,
superannuation is compulsory in Australia so all businesses
are required to administer this, whereas only 17 percent of
the New Zealand respondents had superannuation schemes. In
New South Wales, superannuation, along with occupational
health & safety work, was the most time consuming regulation
for business.

Other main findings are:

- Accident
Compensation – 73 percent of New Zealand businesses handle
premium renewals in less than two hours compared with 60
percent of Australian businesses.

- Occupational health
and safety – in the New South Wales survey, findings showed
that occupational health and safety compliance work was,
along with superannuation, the most time consuming
regulation for business. Findings in Auckland indicate that
47 per cent of businesses worked on an OSH related
compliance matter within two weeks of the survey. The
comparative figure for New South Wales is 56 percent.

-
Unfair Dismissal – in both Australia and New Zealand most
businesses spend from five to 15 hours on this issue. In
both surveys, 5% of the respondents had to spent more than
50 hours in this area. In New South Wales, the majority of
respondents handling an unfair dismissal case in 2002/2003
spent between 5 to 15 hours. The finding for Auckland was
similar.

Mr Barnett says: “Government must work with
business to lessen the overwhelming burden of red tape that
businesses are finding
crippling.”

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